Francis Maude writes:
We have made good progress at putting the nation’s finances on a more stable footing - cutting the deficit we inherited by a quarter.
Leave aside the fact that cutting the deficit by a quarter is no great achievement. I want to complain about that phrase, "the nation's finances". Mr Maude is not referring to the nation's finances, but the government's. And the government and the nation are not the same thing.
However, this trope is not confined to Mr Maude. On yesterday's PM programme (21 min in), Tory councillor Simon Hoare spoke of "the mess the Labour party left in the national finances." Journalists repeat the phrase. The Mail has written of a "black hole in the nation's finances." And the BBC has described the OBR as "a body set up by Mr Osborne to provide independent analysis of the nation's finances."
My objection to this phrase isn't mere pedantry. It can disguise a logical error, demonstrated by Oxfam:
Illegal tax evasion is depriving the UK economy of £5.2 billion a year.
No. If a man dodges £100 of tax, he's £100 better off and the Exchequer is £100 worse off. Net, the UK economy is not deprived at all - or at least, if you think it is, you need to say a lot more about why.
This conflation of the government's finances with the nation's finances has two unpleasant effects.
One is that it stops us seeing the key fact - that the reason why the public finances are in deficit is that other parts of the economy, most notably the corporate sector, are in surplus. If you define "nation's finances" as the financial balances of everyone in the nation, you could easily argue that our problem is that a large part of the nation's finances are too healthy - companies have got too many assets in the bank and not enough in the workplace in the form of capital investment.
Secondly, rhetoric about the "nation's finances" can lead to a fetishism of the deficit, whereby policies are judged only by their impact upon government borrowing. Hopi Sen parodied this thus (at least, I hope it was a parody):
Because the research [pdf] suggests that the Treasury would save £2.2 billion a year under such a scheme, given a reasonably creative press officer and a friendly journalist, the Living Wage could even become a plan to balance the books on the backs of 160,000 extra unemployed!
300 years ago, people used to judge the health an economy by its trade balance. Today, they seem to do so by its government balance. So much for progress.